Federal Government Contracting: A Different Culture

The Spearin Doctrine, Christian Doctrine, False Claims Act, BCAs, FARs, Davis-Bacon. If you do not know all of these concepts, you should rethink bidding on a federal government project.

One of my clients was awarded a subcontract on an Air Force job. Along with the general contractor’s standard terms and conditions was a 6-inch thick pile of documents that included the Contract Work Hours and Safety Standards Act, Davis-Bacon wage scales and a host of FARs (Federal Acquisition Regulations). Learning government regulations on the job is not the wisest course of action.

Why are government jobs different?

The government looks for uniformity. Sort of. The majority of federal contacts are competitively bid. The majority of federal money is spent on negotiated contracts.

Billions of dollars are spent every year on procurement—items from plastic bags to office buildings. For the federal government, control is key. There are standard specifications, standard bid and bond forms and standard terms and conditions of contract, all required by the FARs.

Enforcing and interpreting the FARs has been left largely to the Boards of Contract Appeals (the BCAs). Each agency has one, and the judges are experienced.

As a result, the federal government has massive amounts of BCA decisions (case law) to give guidance on almost every aspect of contract disputes. With the federal government, there is a certain amount of predictability in contract disputes because of the wealth of published decisions on so many areas of contracting.

A new world

The federal government has been experimenting with the “design/build” (d/b) concept for otherwise ordinary jobs. One of the primary reasons for this shift is the greater expertise manufacturers and contractors have over building designers, with new products, particularly with electronics and devices.

These design/build contracts, however, are being monitored by the same federal agencies that have had long training and experience with the FARs. The result is that the federal government cannot quite let go of design control.

Problems occur where the government has detailed specifications and drawings, but also has language in the contract requiring the contractor to meet certain performance standards. Do these detailed specs fall within the Spearin Doctrine, or are they design specs that put the burden on the contractor to deliver a workable result? The boards have ruled that you need to look at the individual specs for the answer—some may be design, some performance—regardless of whether the term “design/build” is part of the construction contract.

Disputes

Under the federal contracting scheme, filing claims is a standardized procedure. Appeals from an adverse ruling of a contracting officer also involve standardized procedures.

In many ways, claims and disputes in government contracts are more common than with private contractual agreements.

For example, agencies have claims manuals, instructing their employees as well as contractors on the types of damages that are recoverable, and what proof is necessary. These manuals are invaluable to any company dealing with the federal government. The manuals are readily available from the Government Printing Office, or they can be obtained through a request to the agency under the Freedom of Information Act.

The Severin Doctrine

Under the common law of England, from which we derive so much of our legal system, the government (the sovereign) was immune from lawsuits unless it consented to be sued, such as by issuing a contract. Sovereign immunity has been seriously eroded over the years, but it still exists.

In a 1943 judicial decision that has become a doctrine of construction law, Severin v. United States, the Court of Claims decided that a contractor could not “pass through” a subcontractor’s claim unless it admitted liability for the claim.

With the federal government, the deadly effect of the Severin Doctrine can be eliminated with a “liquidation agreement,” a concept over which state courts still struggle. Under a liquidation agreement, the general contractor admits liability to the sub, but only to the extent it can collect on a claim against the owner. These can be complicated agreements.

Every state has its own unique laws on bids, contracts and disputes. These laws are almost constantly changing. To complicate matters, where federal funding is involved, there is often an overlayering of federal regulations on state-sponsored projects.

Brochures and handbooks are available guides to the statutes, rules and regulations. It would also be advisable to seek the counsel of an attorney with experience in government contracts.